You definitely cannot ignore the role that insurance plays in your life. Whether or not you have purchased insurance on your own, there comes a time when a situation arises where you receive some compensation depending on circumstances. Basically, the purpose of insurance is to provide for some form of compensation when a situation arises. This is why governments, organizations, companies, firms and individuals buy insurance that covers risks they or their properties are exposed to.
Even so, there are governments, organizations, companies, firms and individuals who have suffered in one way or another and yet fail to get compensated by their insurance companies. This happens because of varied reasons that boil down to mistakes when buying insurance. Below are 5 common mistakes when buying insurance, mistakes that you need to avoid at all costs.
- Wrong choice of insurance agent – Most people buy insurance from insurance agents and you may not be an exception. This is the frontline person who tries his/her level best to find you an insurance cover that best protects your risks. Choice of agent is very critical. You need to buy insurance from a reputable and licensed agent who operates legally. It may also be necessary to buy from a specialized agent rather than from a general insurance agent.
- Failure to understand insurance policy – Most people who buy insurance only come to understand what the provisions of their policy documents mean after lodging insurance claims. You need to take your time to read and understand your policy document before you sign on the dotted line hence committing yourself. Apart from your insurance agent, you need to engage a third party to explain to you every clause in the policy document.
- Buying insufficient coverage – This is one of the costly 5 common mistakes when buying insurance that you must avoid. Most people only buy limited insurance with the hope that no major incident/accident will occur. The fact that you cannot predict the future means that you need to buy sufficient insurance cover that you need. Buying limited coverage with the aim of saving on premium can be very costly in the end. This is so because your insurer will only compensate you for the limited cover.
- Failure to update insurance coverage – There is no doubt that things change in life, which makes it necessary to update your insurance policy once in a while. This however depends on your type of insurance policy.
- Failure to capitalize on discounts – Many insurance companies offer great discounts with the aim of attracting more clients. Having purchased insurance from a specific company does not tie you to that particular company; you can easily switch over to a company that not only provides the same coverage but also does so at affordable premium rate.
These are just some 5 common mistakes when buying insurance that you need to avoid when shopping for insurance that provides coverage that you need.
